An individual has $10,000 invested in a stock with a beta of 0.4 and another $65,000 invested in a stock with a beta of 2.5. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places.
Why is it important to invest in a diversified portfolio? Which stock risk measure should you care about if you have a diversified portfolio? Can you eliminate all portfolio risk?
Discuss the current Yield spread and comment on future movements (explain your reasoning with academic references).